India Develops New Aviation Policy as It Gears-up For ‘Make in India’ Campaign

2016-02-24

Photo: igovernment.in

India’s air cargo throughput is expected to grow by more than 180% over the next 15 years as the government implements several supply chain improvements as part of its ‘Make in India’ campaign.

Speaking at the Air Cargo India event in Mumbai, Renu Singh Parmar, senior adviser at the Ministry of Civil Aviation said its projections showed that air cargo throughput would increase from 2.6m tonnes last year to 8.7m tonnes in 2030.

This includes 3.6m tonnes of domestic cargo and 5.1m tonnes of international traffic.

Although the country’s economy is now the fastest growing in the world – faster now than China – the rise in air cargo throughput also stems from an expected increase in manufacturing in the country as a result of the government’s ‘Make in India’ campaign.

Prime Minister Narendra Modi’s government hopes that in the medium term manufacturing will increase by as much as 14% and by 2022 will represent 25% of the country’s GDP compared with around 15% today.

However, as well as introducing measures to improve foreign investment in manufacturing, it also knows it will need to improve supply chain processes and infrastructure if it is to encourage companies to create production lines in the country.

In order to do so, Parmar said the government had already made several changes.

For instance, in 2014 it increased the foreign direct investment caps on airfreight operations in the country to 49% without government approval and 74% if government approval is sought.

It has also been working on a new civil aviation policy for the last six months that include several incentives for the sector.

This will include air cargo being given infrastructure status, meaning a ten-year tax break, if it is located at an airport; a shift to paperless cargo processing and e-freight; the introduction of trade and warehouse freezones; competitive user charges; and streamlining of Customs to procedures to reduce “dismal” dwell times to 48 hours for imports.

It has also introduced 24/7 Customs operations at airports to help improve the flow of cargo, although Parmar admitted that improvements had not really taken place. The ministry was sitting down with Customs to discuss why it hasn’t happened, she added.

“The civil aviation policy is a very forward policy in the search for air cargo, which will also help make the prime minister’s ‘Make in India’ dream come true,” Parmar said.